{"id":815178,"date":"2024-12-27T03:19:42","date_gmt":"2024-12-27T09:19:42","guid":{"rendered":"https:\/\/newsycanuse.com\/index.php\/2024\/12\/27\/access-to-capital-remains-tough-for-space-companies\/"},"modified":"2024-12-27T03:19:42","modified_gmt":"2024-12-27T09:19:42","slug":"access-to-capital-remains-tough-for-space-companies","status":"publish","type":"post","link":"https:\/\/newsycanuse.com\/index.php\/2024\/12\/27\/access-to-capital-remains-tough-for-space-companies\/","title":{"rendered":"Access to capital remains tough for space companies"},"content":{"rendered":"

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Investors speaking during the Satellite Innovation conference in Mountain View, California, said the financial markets remain challenging but also promising for space companies. Credit:<\/span> Satellite Innovation 2024 webcast<\/span><\/span><\/figcaption><\/figure>\n
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TAMPA, Fla. \u2014\u00a0Lower interest rates should fuel more space investments but many companies will still struggle to raise funds, according to an Oct. 21 Satellite Innovation panel of investors.<\/p>\n

\u201cDespite all the dry powder that\u2019s out there on the private side, it\u2019s remaining a pretty challenging environment for folks to raise money,\u201d said B. Riley Securities senior managing director John Stack, particularly for funding rounds larger than Series A.<\/p>\n

The public market also continues to be volatile for space companies, although the panelists pointed to signs of bifurcation as stocks such as Rocket Lab rise above a broadly underperforming sector.<\/p>\n

\u201cYou\u2019re also seeing just an incredible dearth of companies out there that \u2026 are growing at a place where they can really get the valuations they need,\u201d said Mike Collett, managing partner at Promus Ventures.<\/p>\n

The sector is in \u201ca painful place where boards and companies that haven\u2019t reset valuations that are so far out of whack are resetting them now,\u201d he added.<\/p>\n

Still, AE Industrial Partners principal Tyler Letarte said the U.S. Federal Reserve\u2019s recent decision to lower a key overnight borrowing rate by half a percentage point to a range of 4.75-5% \u2014 the first reduction since the early days of the Covid-19 \u2014 will help facilitate deals.<\/p>\n

\u201cWhether they stay there is a question mark, of course, but as they remain at that level, you have people willing to give you dollars and that can help facilitate a transaction,\u201d Letarte said.<\/p>\n

AE Industrial Partners sees funding opportunities across Series A, B and C rounds.<\/p>\n

Lower your expectations<\/strong><\/p>\n

\u201cI can echo the fact that valuations do remain high,\u201d he added.\u00a0<\/p>\n

\u201cWe are somewhat scratching our heads every once in a while from some of the asks that we\u2019re seeing.\u00a0<\/p>\n

\u201cNonetheless, we\u2019re trying to get deals done where they make sense, and there are more \u2026 realistic companies out there that want to partner and see the benefit of kind of resetting that base value, because that means your next round has the opportunity to be even more successful.\u201d<\/p>\n

Ronald Epstein, a managing director at Bank of America Securities, attributed much of the current market uncertainty to a lingering hangover from the economic disruption caused by COVID-19.<\/p>\n

\u201cWe went through this global economic situation where literally just mountains of stimulus were stuck into the global economy,\u201d Epstein said, \u201cand it had all kinds of disruptive effects that I would argue most economists didn\u2019t understand.<\/p>\n

\u201cAnd we\u2019re just kind of getting through that, and the farther along we go, the more that gets behind us, the more normal things get. And it does seem like we\u2019re getting in a more normal environment now, but there\u2019s still a lot of economic uncertainty floating around.\u201d<\/p>\n

Ultimately, the panelists agreed that space companies most likely to succeed in raising capital will be those that prioritize strong execution of their business strategies and consistently meet financial targets.<\/p>\n

A well-developed sales team has proven critical for successful space companies, noted S. Sita Sonty, a partner and managing director at AlixPartners, who said this has historically been a weakness for the space industry.<\/p>\n

\u201cAnother thing that I think really sets them apart is, if you have a good sales engine you also still need to have diverse engineering skills,\u201d Sonty said.<\/p>\n

\u201cAnd that is what makes SpaceX special. You have the same engineer working on mechanical, electrical systems. You have the same people working on Starlink, Starship, Crew Dragon, Cargo Dragon.\u201d<\/p>\n

She said cross-functional capabilities reduce headcount costs and help companies achieve milestones faster by streamlining collaboration across different areas.<\/p>\n<\/p><\/div>\n

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\n\t\t\t\t\t\t\tJason Rainbow writes about satellite telecom, finance and commercial markets for SpaceNews. He has spent more than a decade covering the global space industry as a business journalist. Previously, he was Group Editor-in-Chief for Finance Information Group,…\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\tMore by Jason Rainbow\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/p>\n<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n

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Jason Rainbow Read More<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Investors speaking during the Satellite Innovation conference in Mountain View, California, said the financial markets remain challenging but also promising for space companies. Credit: Satellite Innovation 2024 webcast TAMPA, Fla. \u2014\u00a0Lower interest rates should fuel more space investments but many companies will still struggle to raise funds, according to an Oct. 21 Satellite Innovation panel<\/p>\n","protected":false},"author":1,"featured_media":815179,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4397,248],"tags":[11476],"class_list":{"0":"post-815178","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-access","8":"category-capital","9":"tag-bitcoins"},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/815178","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/comments?post=815178"}],"version-history":[{"count":0,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/815178\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media\/815179"}],"wp:attachment":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media?parent=815178"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/categories?post=815178"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/tags?post=815178"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}